Insurance consumer group slams govt
Zakki P. Hakim, Jakarta
A consumer group slammed on Monday the Ministry of Finance for its indecisiveness in dealing with 11 insurance companies in difficulty, thus questioning its capability to exercise its possible exclusive authority to declare insurance companies bankrupt.
Indonesia Insurance Consumers Foundation (YLKAI) spokesman Samladi Pekih said that based on Government Decree No. 73/1992 on insurance business practice, the ministry already had the authority to terminate the operation of a failed insurance company.
However, he said, the ministry had apparently failed to act as it had yet to decide the fate of 11 troubled insurance firms, even though all of them had exceeded the suspension deadline specified in the regulation.
The 11 companies are PT Asuransi Jiwa Pura Nusantara, Koperasi Asuransi Jiwa Indonesia, PT Nabasa Life Insurance, PT Asuransi Jiwa Namura Tata Life, Asuransi Jiwa Buana Putra, Asuransi Jiwa Berkah Harda Sentosa, PT Asuransi Nugra Pacific, PT Asuransi Sakarukma Sindukarta, PT Asuransi Inda Tamporok Life, PT Asuransi Ganesha Danamas and PT Asuransi Securindo Adigama.
The firms were partially suspended by the government in 2002 and 2003 for failing to meet their obligations to policyholders. Following the suspension, the firms were still allowed to operate in order to address their problems.
Under Government Decree No. 63/1999, a partial suspension is valid for 12 months at the most.
An article of the decree stipulates that should a troubled insurance firm fail to solve the problems that have led to its partial suspension, the ministry may terminate its operations.
"The 12-month deadline has passed for all 11 companies, but the ministry has yet to terminate any of them," he said, while claiming that the YLKAI represented policyholders of the 11 firms.
"Where is the government's resolute approach in this case?" he asked, adding the 11 insurance firms' policyholders had suffered due to the ministry's slow action.
He said that the policyholders were awaiting a decision on whether or not they could get their money back.
Samladi thus cast doubts on the ministry's ability to exercise its possible exclusive right to declare insurance firms bankrupt. He gave as an example one of the 11 firms, Namura, which had been declared bankrupt, not by the ministry but by a local court, following a lawsuit filed by the policyholders.
There is an opinion that the ministry should be allowed to become the single authority to declare unhealthy insurance firms bankrupt. Such an opinion has been gaining ground recently, following the case involving British-based insurance firm PT Prudential Life Assurance, which was declared bankrupt by the Jakarta Commercial court in April.
The idea was proposed on Monday by the Indonesian Advocates Association (AAI), Indonesian Insurance Council (DAI) and the Indonesian Association of Receivers (AKPI) during a hearing with the House of Representatives on an amendment to the existing bankruptcy law, which would allow courts to declare insurance firms bankrupt.
"The House should be wise in deliberating the amendment," warned Samladi.
Should the House amend the law in accordance with the proposal, there should be a clear-cut provision allowing the public to take action against the minister of finance in the event he or she fails to act against cheating insurance firms.
Separately, ministry insurance division director Firdaus Jaelani told The Jakarta Post that his institution was indeed delaying the termination of the 11 partially suspended firms as it was still seeking a better solution.
"We are waiting for the right time to take action," Firdaus said.
He said the ministry would revoke the companies' licenses at an opportune time and call an extraordinary shareholders' meeting to agree on the liquidation.
"If they refuse, we will declare them bankrupt," he said.